Cardinal Company is considering a five-year project that would require a $3,025,000 investment in equipment with a useful life of five years and no salvage value. The company's discount rate is 16%. The project would provide net operating income in each of five years as follows: Sales Variable expenses Contribution margin Fixed expenses: Advertising, salaries, and other out- of-pocket costs Depreciation Total fixed expenses Net operating income $610,000 605,000 Project's internal rate of return $2,737,000 1,001,000 1,736,000 (Hint: Use Microsoft Excel to calculate the discount factor(s).) % 1,215,000 $ 521,000 5. What is the project's internal rate of return? (Round your answer to nearest whole percent.)

Cardinal Company is considering a five-year project that would require a $3,025,000 investment in equipment with a useful life of five years and no salvage value. The company's discount rate is 16%. The project would provide net operating income in each of five years as follows: Sales Variable expenses Contribution margin Fixed expenses: Advertising, salaries, and other out- of-pocket costs Depreciation Total fixed expenses Net operating income $610,000 605,000 Project's internal rate of return $2,737,000 1,001,000 1,736,000 (Hint: Use Microsoft Excel to calculate the discount factor(s).) % 1,215,000 $ 521,000 5. What is the project's internal rate of return? (Round your answer to nearest whole percent.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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